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U.S. Supreme Court rules in cross-border water rights dispute; Oklahoma scores a clean sweep in “Red River rivalry” with Texas

On June 13, 2013, the United States Supreme Court issued a 9–0 decision in Tarrant Regional Water District v. Herrmann,1 a dispute involving whether the Red River Compact (Compact) authorized Texas to cross into Oklahoma to take its allocation of excess water in a particular subbasin of the Red River. Oklahoma successfully argued that the Compact provided no such cross-border right. Concurring entirely with Oklahoma’s position, the Court concluded that: 1) the Compact did not allow Texas to enter Oklahoma to obtain its water allotment; 2) the Compact did not preempt Oklahoma laws restricting out-of-state water diversions; and 3) Oklahoma laws were not unconstitutional restrictions on interstate commerce. While the decision will have considerable consequences for Texas’ ability to meet its ever-growing need for water, it may also significantly impact states seeking water from rivers covered by other interstate compacts.

THE COMPACT’S TERMS

In 1978, four States—Arkansas, Louisiana, Oklahoma and Texas—entered the Compact to resolve decades of disagreement over allocation of the Red River’s waters.2 One of the Compact’s principal purposes was “[t]o provide an equitable apportionment among the Signatory States of the water of the Red River and its tributaries.”3

To effectuate this purpose, the Red River was sectioned into five separate subdivisions called “reaches” beginning at the New Mexico/Texas border and extending through Arkansas and Louisiana, each of which was further divided into subbasins.4 The dispute in this case centered on water located in Subbasin 5 of Reach II, which occupies “that portion of the Red River, together with its tributaries, from Denison Dam down to the Arkansas-Louisiana state boundary, excluding all tributaries included in the other four subbasins of Reach II.”5 Subbasin 5 is located entirely within the State of Oklahoma.

The Tarrant Regional Water District (TRWD) is a Texas state-sanctioned entity responsible for providing water to the greater Dallas-Fort Worth area. With the State of Texas’ concurrence, TRWD sought to divert Texas’ entitled share of Compact water from the Kiamichi River, a tributary of the Red River situated entirely within Subbasin 5 in Oklahoma. TRWD wanted to capture the Kiamichi River water before it entered the Red River because the water in the Red River was significantly more saline and would require costly technology to make it potable. Water in the Kiamichi River, however, was suitable for domestic and industrial use and would not require further refining.

THE DISPUTE’S GENESIS

Starting in 2000, TRWD pursued various means to secure water from the Kiamichi River, including purchasing it from Oklahoma and the Choctaw and Chickasaw Nations and seeking a water resource permit from the Oklahoma Water Resources Board (OWRB). However, TRWD faced a major hurdle -- a series of Oklahoma state laws that effectively barred out-of-state applicants from taking or diverting water from within Oklahoma’s borders.6

Thus, when TRWD filed its application for a water permit with the OWRB, it also filed suit in Federal District Court claiming that the Oklahoma statutes were preempted by federal law implementing the Compact and impermissibly discriminated against interstate commerce in water. Both the Federal District Court and the Tenth Circuit Court of Appeals granted judgment for Oklahoma.

THE SUPREME COURT’S RULING

The Court affirmed the lower court decisions that Texas could not take water from within Oklahoma’s borders without that state’s consent. In reaching this conclusion, the Supreme Court first interpreted language in the Compact, phraseology common to other compacts, which stated:

The Signatory States shall have equal rights to the use of runoff originating in subbasin 5 and undesignated water flowing into subbasin 5, so long as the flow of the Red River at the Arkansas-Louisiana state boundary is 3,000 cubic feet per second [hereinafter CFS] or more, provided no state is entitled to more than 25 percent of the water in excess of 3,000 [CFS].

TRWD construed the “equal rights” language to allow Texas to cross into Oklahoma to obtain its water from Subbasin 5, subject to the twenty-five percent cap. In contrast, Oklahoma contended that the language afforded each signatory state an equal opportunity to make use of the excess water within each subbasin, but only within each state’s own borders.

In interpreting the provision, the Court sided with Oklahoma, stating:

Three things persuade us that cross-border rights were not granted by the Compact: the well-established principle that States do not easily cede their sovereign powers, including their control over waters within their own territories; the fact that other interstate water compacts have treated cross-border rights explicitly; and the parties’ course of dealing.7

In response to TRWD’s contention that without a right of entry into Oklahoma, Texas and the other two states would be prevented from accessing their allotted twenty-five percent of excess water in Subbasin 5, the Court reasoned that the provision is not a guarantee of a minimum amount of water. Rather, it serves as a ceiling. If Texas believed it was not getting its fair share of water, its sole remedy was to seek an accounting as provided under the Compact and demand that Oklahoma desist from taking more than its share.

TRWD further asserted that Congressional ratification of an interstate compact did not automatically authorize states to impose otherwise impermissible burdens on interstate commerce, even though an interstate compact, once ratified, becomes federal law. Instead, TRWD contended that Congressional ratification of an interstate compact allowed a state to impose such burdens on interstate commerce only if the ratifying legislation made it “unmistakably clear” that Congress “intended to permit state regulation which would otherwise violate the dormant Commerce Clause.” The Court rejected TRWD’s analysis and declined to impose the requested “clear and unambiguous intent” requirement.

As for TRWD’s contention that Oklahoma’s statutes improperly favored local over foreign interests in the distribution of unallocated water, the Court noted that “the Compact leaves no waters unallocated.” It determined that, under the language of the Compact, all water exceeding Oklahoma’s twenty-five percent share in excess of the 3,000 CFS base amount is allotted to Oklahoma “unless and until another State calls for an accounting and Oklahoma is asked to refrain from utilizing more than its entitled share.” Further, the Court ruled that a constitutional issue may arise only if it was established that Oklahoma was discriminating against interstate interests with regard to the excess water above Oklahoma’s twenty-five percent share. While the Court did not elaborate on the circumstances that might cause such discrimination, its analysis suggests that discrimination could only be proven through an accounting showing that Oklahoma used more than its excess water allotment under the Compact, and that Texas was somehow prevented from using its share.

The Court’s opinion leaves unsettled the manner in which Texas is to access its share of excess water from Subbasin 5. Oklahoma actually “owns” both banks of the Red River up to the vegetation line on the river’s southern shore. Since, under this decision, Texas cannot enter Oklahoma to obtain its share of Subbasin 5 water without Oklahoma’s consent, it is unclear how Texas can access that water.

THE DECISION’S IMPACT ON OTHER INTERSTATE COMPACTS

In Phillips Petroleum Company v. Mississippi, 484 U.S. 469 (1988), the Supreme Court addressed the protection of property rights, stating:

We have recognized the importance of honoring reasonable expectations in property interests. Cf. Kaiser Aetna v. United States, supra, 444 U.S., at 175, 100 S.Ct., at 390. But such expectations can only be of consequence where they are “reasonable” ones.

The Court’s decision in Tarrant Regional Water District v. Herrmann appears to reflect a presumption that “expectations in property interests” established under interstate water compacts are “reasonable” ones that should be protected. Thus, future challenges by interstate compact members seeking access to cross-border water sources may have to overcome this presumption, a daunting task given the scope of property rights created by such compacts and related state water laws.

It is difficult to escape the conclusion that parties challenging compacts allocating interstate water resources will face significant hurdles. As evidenced by the Tarrant decision, the Court appears to be unwilling to upset the proverbial apple cart. Compact states in the same position as Oklahoma should be relieved that their rights to water located within their borders remain intact. However, the Court’s opinion makes it more difficult for states like Texas, which lack adequate water resources, to secure new supplies. Further, parties to interstate water compacts (and to disputes arising thereunder) should be mindful of the Court’s almost century-old admonition that states should look to cooperative study, conference, and mutual concessions before beginning judicial proceedings.8 Careful drafting of new compacts or amendments to existing compacts may be one of the few avenues left for acquiring new water sources for thirsty states.

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